Not everybody has tens of thousands of dollars sitting in their bank account waiting for the right investment. So where do you start if you’re at square one?

It begins with changing your mindset, creating new thought habits, and being smart about money. There are plenty of philosophies and ideologies that don’t always occur to you to put to action overnight. It’s a practice you can start right away, but it takes time and patience for results to reveal themselves.

Check your credit report

Before you can change the way you earn, spend, save, and invest your money, find out the official state of your financial situation first. A credit report will paint a glaring picture of your debts or healthy habits. It should open your eyes to your spending habits on a broad scale. This will help you analyze what needs to be fixed first. If you have a lot of credit cards open with high balances, you can start by gradually paying those off to build your score back up. You should also make sure that each item is correct, so that your credit score isn’t being negatively affected by false information. If you have a high credit score already, you’re on the right track!

Analyze your spending habits and cut the fat

It’s time to go on a diet. A bank account diet. Divide your spending into categories (necessities, debt, entertainment, dining out, subscriptions, investments, etc.) and add up how much you spend in each of them. Subtract the total of your spending in these categories from your income, then ask yourself some questions: Are you spending less than you earn? If yes, widen the gap even more. Are there categories in which you could spend less (like subscription services or cable?) Are you overpaying for certain necessities like insurance or shopping at expensive grocery stores? Are you placing any money towards investments including investments in yourself at all? Now it’s time to something better than a budget — a Financial Commitment.

Create a financial commitment

A “budget” is a list of how much you can spend in certain areas. But, you can’t build wealth by just following a guideline, you have to do it by creating and holding to a commitment. By turning something into a commitment, you’re more likely to make it happen. Let’s make money happen. Your Financial Commitment will be a pledge and a responsibility to yourself to uphold healthy and intelligent spending habits. For each category in which you spend, (necessities, entertainment, investments, savings, etc.) create a physical space they funnel to i.e. a bank account, or even a jar. Set a percentage or amount standard for each jar and commit to it every month. This way, you know exactly how much you’re allowed to spend, and because you’ve committed to it, you’ll never spend more than you earn. More importantly, you’ll be able to grow your money much quicker.

Invest

Within your financial commitment, one of the most important ways to build wealth is to invest. Set aside a jar for investments. Whether it’s stocks, flipping homes, or commercial real estate, find ways to make money work for you.

Invest in yourself

Your self worth will never exceed your net worth. So it’s just as important to invest in yourself, as well. Whatever your passion or calling is in life, actually pursue it so that you can enjoy a life of ease. A life of ease creates freedom, and freedom is what building wealth is all about. For example, if you want to learn more about your particular industry, invest in education. Do you want to take your business or personal life to the next level? Hire a coach. Are you spending too much time on menial tasks that are pulling your further away from pursuing your true greatness? Hire someone to do them for you.

Put money back into yourself, and your wealth will grow.

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